Corporation Tax Act 2009 section 1222

Income from a source not charged to tax

Section 1222 requires companies with investment businesses to set off non-taxable income against their management expenses deduction.

• Where a UK resident company receives income from a source not charged to tax in the course of its investment business, that income reduces the management expenses deduction available under section 1219
• The same rule applies to non-UK resident companies, but only where the income arises through a UK permanent establishment and relates to property or rights used by or held for that establishment
• The reduction applies for the accounting period in which the non-taxable income arises, and cannot reduce the management expenses deduction below zero
• Exempt ABGH distributions — being distributions that fall within paragraphs A, B, G or H of section 1000(1) of CTA 2010 and are exempt under Part 9A — are excluded from this set-off requirement